IMF Urges South Africa to Adopt a More Transparent Debt Rule
Last update: February 11, 2026
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IMF says stronger fiscal framework needed to put debt on downward path despite signs of economic improvement.
The International Monetary Fund has urged South Africa to adopt a clearer and more binding limit on government debt, warning that risks to the country’s economic outlook remain tilted to the downside despite gradual signs of improvement.
In its annual economic assessment, known as the Article IV report, the IMF said spending ceilings introduced in 2012 have failed to prevent debt from rising.
Delia Velculescu, the IMF’s mission chief for South Africa, said the expenditure ceiling had supported fiscal discipline but had not been enough to halt the steady increase in debt over the past 15 years.
To strengthen credibility and place debt on a firm downward trajectory, the Fund recommended adopting a formal rule that would reduce debt to about 70 percent of gross domestic product over the medium term and to around 60 percent over the longer term. Velculescu said such a move would help lower the country’s borrowing costs.
CBI News reports that Africa’s most industrialised economy has shown signs of recovery following years marked by governance scandals and institutional weakening, particularly during former President Jacob Zuma’s tenure.
Recent positive developments include South Africa’s removal from the Financial Action Task Force grey list of countries under increased monitoring for illicit financial flows and its first sovereign credit rating upgrade in 20 years in November.
The recommendation follows an IMF staff visit in late November and early December 2025, during which officials met Finance Minister Enoch Godongwana, Reserve Bank Governor Lesetja Kganyago and other senior policymakers.
In the report released on Wednesday, the IMF said the proposed rule should incorporate spending limits, budget balance targets, clearly defined escape clauses for major economic shocks and oversight by an independent body.
The Fund endorsed the government’s plan to achieve a primary budget surplus of 1.5 percent of GDP in the 2026 fiscal year, meaning revenue would exceed non interest spending.
However, it cautioned that further fiscal tightening would be needed in subsequent years to ensure that debt declines on a sustainable basis.
